<![CDATA[This study examines the effects of innovation and digitalization on the competitiveness of micro, small, and medium enterprises (MSMEs) in Mahakam Ulu Regency, East Kalimantan. A quantitative approach with a survey method was employed, involving 50 MSMEs selected through purposive sampling. Data were analyzed using multiple linear regression. The results show that innovation and digitalization simultaneously affect MSME competitiveness (R² = 0.515). Partially, innovation has a positive and significant effect (t = 5.246, p = 0.000), while digitalization does not have a significant effect (t = 1.614, p = 0.113). These findings indicate that MSME competitiveness in Mahakam Ulu is more strongly determined by innovation capacity than by digital technology adoption alone. Limited digital infrastructure, unequal internet access, and low digital literacy may explain the insignificant effect of digitalization. This study contributes empirical evidence from a geographically distinctive and underexplored region, extending the Resource-Based View and dynamic capabilities perspectives by showing that innovation represents a more immediately effective internal capability, whereas digital technology becomes strategically valuable only when transformed into organizational capability.]]>
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